A framework for new solution development: an adaptive search perspective

Abstract

Suppliers or solution providers are persistently under pressure to find a way toward competitive advantage. The literature indicates that for revenue growth and business opportunities, suppliers (e.g. IBM) must initiate a transition from goods or product-oriented business to solution-based business. Despite the need for solution development, there is a lack of practical and readily adoptable methodologies for suppliers. This is particularly acute in the professional service industry or knowledge-intensive business services (KIBS). This study offers a theory-driven, yet practical, framework for understanding and executing solution development. The proposed framework uses a complexity theory view of strategy and presents new solution development as adaptive search toward higher peaks in the rugged business landscape. This study suggests that the search must be ambidextrous (the combination of local and distant searches). The search toward better solutions has three distinct but inter-related dimensions: supply-side, demand-side, and spatial. The extant literature on service innovation is utilized to shed light on the importance of each of these dimensions. This study proposes a solution development typology based on eight solution strategies, and illustrates it with two examples of KIBS. Finally, this study develops several propositions, which have theoretical and/or practical implications for solution development.

Keywords:

• new solution development
• knowledge-intensive business service
• complexity theory

Acknowledgements

I would like to thank anonymous reviewers for their helpful comments, which have significantly improved this paper. All remaining errors are my own.